Non-fungible tokens (NFTs) have exploded in popularity, with sales surging from $94.9 million in 2020 to $24.9 billion in 2021, according to DappRadar. These unique digital assets, which represent ownership of everything from artwork to virtual real estate, are minted and traded on blockchain platforms. The two leading choices for NFT creators are Ethereum and Polygon, but which one is the best fit for your project? In this comprehensive guide, we‘ll dive deep into the technical, economic, and social factors you need to consider.
Understanding the Contenders
Ethereum and Polygon are both smart contract platforms that support NFTs, but they have some key differences under the hood.
Ethereum: The O.G. of NFTs
Launched in 2015, Ethereum was the first blockchain to enable smart contracts, self-executing code that powers NFTs and other decentralized applications (dapps). It uses a proof-of-work (PoW) consensus mechanism, where miners compete to solve complex mathematical problems and add blocks to the chain. This makes Ethereum highly secure and decentralized, but also energy-intensive and slow.
Ethereum supports two main token standards for NFTs:
- ERC-721: The original NFT standard, ERC-721 defines a minimum interface that allows unique tokens to be tracked and transferred. Each token has a unique ID and can have different properties, like an image or video file. CryptoKitties and Bored Ape Yacht Club use ERC-721.
- ERC-1155: A more advanced standard, ERC-1155 enables semi-fungible tokens that can be both unique and interchangeable. This is useful for things like game items, where some may be one-of-a-kind and others mass-produced. Enjin and OpenSea support ERC-1155.
To mint or transfer an NFT on Ethereum, you need to pay a gas fee in ETH to compensate miners for processing the transaction. Gas fees fluctuate based on network congestion and can range from a few dollars to hundreds during peak demand.
Polygon: The Rising Star
Polygon (formerly Matic Network) is a layer 2 scaling solution for Ethereum that uses sidechains to offload transactions and reduce fees and congestion. It was launched in 2017 and has gained significant traction in the NFT space.
Polygon uses a proof-of-stake (PoS) consensus mechanism, where validators lock up MATIC tokens as collateral to process transactions and earn rewards. This is more energy-efficient than PoW and enables faster block confirmations. Polygon can handle up to 65,000 transactions per second, compared to Ethereum‘s 14.
Polygon is fully compatible with Ethereum and supports the same token standards and programming languages like Solidity. This makes it easy for developers to port their dapps and NFTs over. Some notable NFT projects on Polygon include Aavegotchi, Decentraland, and Zed Run.
Because Polygon sidechains have their own validators and gas fees in MATIC, the cost to mint and transfer NFTs is much lower than on Ethereum mainnet. Fees are often a fraction of a cent and some dapps even subsidize them for users.
Head-to-Head Comparison
Now that we‘ve covered the basics, let‘s compare Ethereum and Polygon on some key metrics for NFT projects.
Ethereum is the clear leader in NFT sales, with a total volume of $37.7 billion across all marketplaces and collections as of May 2023, according to CryptoSlam. The top Ethereum NFT marketplace, OpenSea, had $31.8 billion in sales alone. Polygon ranks a distant second with $324.5 million in total sales.
However, Polygon is growing rapidly, with sales increasing 190% in Q1 2023 compared to the previous quarter, according to Footprint Analytics. And with Ethereum gas fees still high, many new projects are opting for Polygon first. The blockchain now accounts for over 60% of new NFT mints, according to a January 2023 report by Nansen.
User Adoption and Engagement
Ethereum has a significant lead in total unique wallets that have interacted with NFTs, at 3.6 million compared to Polygon‘s 1.1 million, according to Dune Analytics as of May 2023. However, Polygon is catching up fast, with wallet growth of 980% vs Ethereum‘s 200% year-over-year.
In terms of user engagement, Polygon also shows promise. The average Polygon user interacts with NFTs 11 times per month, almost double the Ethereum average of 6, according to a December 2022 report by DappRadar. This may be due to the lower cost of experimentation on Polygon.
Developer Ecosystem and Tools
As the incumbent platform, Ethereum has the largest ecosystem of NFT marketplaces, wallets, analytics, and other tools. OpenSea, Rarible, and Nifty Gateway all started on Ethereum, although many have since added Polygon support. Ethereum also has the most robust developer community and resources.
However, Polygon is rapidly building out its own ecosystem and attracting major partners. The blockchain has native marketplaces like NFTrade and Refinable, as well as Polygon versions of OpenSea, Rarible, and Nifty Gateway. Polygon Studios has also invested $100 million in NFT and gaming projects to build on the platform.
Polygon‘s Ethereum-compatibility means developers can easily use existing tools and libraries like Hardhat, Truffle, and OpenZeppelin. And the lower gas fees make it more feasible to experiment and iterate quickly.
Security and Decentralization
As the world‘s largest smart contract platform, Ethereum is battle-tested and highly secure. The PoW consensus makes it very expensive to attack the network, and the large number of miners and nodes ensures decentralization. Ethereum has never been successfully 51% attacked.
Polygon, with its PoS consensus and smaller validator set, is theoretically more vulnerable to attacks and centralization. However, the platform has taken steps to mitigate this, such as implementing a multi-sig wallet for contract upgrades and partnering with bug bounty platform Immunefi.
Polygon also relies on Ethereum for its security, as validators must stake ETH on the mainnet to participate. And sidechains can always be abandoned if compromised, with assets moved back to Ethereum.
In terms of smart contract security, both platforms have had their share of exploits and hacks. In 2022, Ethereum NFTs lost $100 million to scams and exploits, while Polygon lost $2 million, according to CertiK. Regardless of the platform, NFT creators need to prioritize security audits and best practices.
Energy Consumption and Environmental Impact
One of the biggest criticisms of Ethereum‘s PoW consensus is its high energy consumption, which has been compared to the power usage of small countries. This has led to concerns about the environmental impact of NFTs on Ethereum.
Polygon‘s PoS consensus is much more energy-efficient, using only a tiny fraction of the electricity of Ethereum. This has made it a more attractive choice for eco-conscious NFT creators and collectors.
However, Ethereum is in the process of transitioning to its own PoS system, Ethereum 2.0, which is expected to reduce its energy consumption by 99%. This upgrade, set to be completed in 2022, could level the playing field with Polygon.
Future Outlook and Roadmap
Both Ethereum and Polygon have ambitious plans to scale and improve their platforms for NFTs and other use cases.
Ethereum‘s 2.0 upgrade, also known as Serenity, will bring several major improvements:
- PoS consensus, which will reduce energy consumption and enable a wider range of participants to become validators
- Sharding, which will split the blockchain into multiple parallel chains to increase transaction throughput and reduce fees
- eWASM, a new virtual machine that will enable more efficient and secure smart contract execution
These upgrades are expected to help Ethereum compete with layer 2 solutions like Polygon on speed and cost while maintaining its decentralization and security advantages.
Polygon, meanwhile, is investing heavily in zero-knowledge (ZK) proofs, a cryptographic technique that allows for faster and more private transactions. The platform plans to launch several ZK-based solutions, including:
- Polygon zkEVM: A ZK-rollup that will enable Ethereum-compatible smart contracts to be executed off-chain and verified on-chain, improving scalability and privacy
- Polygon Miden: A STARK-based ZK-rollup that will offer even faster transaction speeds and lower fees
- Polygon Zero: A ZK-proof system that will enable private and anonymous transactions on Polygon
These solutions will help Polygon scale to billions of users and transactions while maintaining its low costs and fast speeds. They will also make the platform more attractive for privacy-sensitive NFT use cases, like identity and gaming.
Conclusion: Which Is the Best for Your NFT Project?
So which blockchain should you build your NFT project on? As we‘ve seen, both Ethereum and Polygon have their strengths and weaknesses. Here are some general guidelines:
- If you‘re launching a high-value NFT collection and need the maximum level of security and decentralization, Ethereum is the way to go. Its larger user base and mature ecosystem also make it a good choice for reaching mainstream audiences.
- If you‘re launching a larger collection of lower-priced NFTs and want to minimize costs for yourself and your buyers, Polygon is a better fit. Its faster transaction speeds also make it better for NFT-powered games and other interactive experiences.
- If you‘re launching a collection with strong social or environmental themes, Polygon‘s low energy consumption may align better with your values and attract like-minded collectors.
- If you plan to offer your NFTs on multiple chains eventually, it may be easier to start on Ethereum and bridge to Polygon and other platforms later, given its larger ecosystem of tools and marketplaces.
Of course, these are just general guidelines and your specific needs may vary. We recommend thoroughly researching and testing both platforms before making a decision.
Whichever platform you choose, the most important things are to create unique and valuable NFTs, build a strong community around your project, and continuously adapt and innovate as the technology evolves. By staying informed and agile, you can navigate the exciting world of NFTs and create successful projects on Ethereum, Polygon, or any other blockchain that emerges in the future.